Bitcoin (BTC) currently boasts a circulating supply of around 16,903,500 virtual units. The maximum supply is capped at 21 million Bitcoin – but that won’t happen for many years. Based on the current price of around $11,025 per unit (this figure can fluctuate wildly from day-to-day), the market capitalization of Bitcoin is around $186.362 billion. Granted, that’s a far cry from the market capitalization of Bitcoin in December 2017 when it topped out around $20,000 per unit. If we assume the current circulating supply, that translates into around $338 billion at its zenith.
In a cryptocurrency market dominated by an estimated 1,541 digital currencies spread across 9,122 markets, Bitcoin is still a power player. Consider that it now accounts for a whopping 41.8% of the market. This figure was dropping sharply as competing cryptocurrencies like Bitcoin Cash, Ethereum, Ethereum Classic, Dash, Litecoin, Ripple, and even Raiblocks gained the attention of crypto traders. The total market capitalization of all cryptocurrencies is now $446.368 billion – significantly lower than the December high.
This begs the question: Have traders missed out on the Bitcoin boom?
According to research analysts and professional traders at Wilkins Finance, not at all.
‘If we dissect the cryptocurrency market, especially Bitcoin, Ethereum, Litecoin and Ripple, we see some interesting realities. For starters, the 1-year performance of all these cryptocurrencies is nothing short of spectacular. Few financial instruments can lay claim to the record breaking performances of Bitcoin and Altcoin. But before you can evaluate the strength or weakness of an investment opportunity, it’s important to understand precisely what you’re dealing with.
The most comprehensive cryptocurrency definition is one which covers the fundamentals of the digital currency in question. How did it begin? What is it used for? How can you trade it? Should you buy it? Once you can ascertain satisfactory responses to these types of questions, you will be better poised to understand whether there is future potential or not. Granted, the run-up to the December high of Bitcoin which topped out around $20,000 per unit appears to be a thing of the past. The purported Bitcoin Bubble has deflated somewhat, but in its place is a value-driven financial investment that is as attractive as ever.
What Bitcoin and other cryptocurrencies offer modern-day traders and investors is something we haven’t seen in the financial markets for eons – excitement. The sheer volatility of these financial instruments is enough to make traders stand up and take notice. Whether you’re buying and holding – waiting for appreciation to take place or buying on the dip to capture a good deal, digital currency is an ever-present opportunity waiting to be plucked. Derivatives trading of digital currency is equally popular nowadays. People are buying crypto CFDs which track the price movements of these underlying assets, but don’t require traders to profit in one direction only.
In other words, you can use CFDs as a hedge against cryptocurrency market price declines. By adopting a bearish perspective, it’s entirely possible to profit when markets sour.
What Does a Typical Cryptocurrency Trade Look like?
Cryptocurrency is traded much like Forex – against fiat currency in pairs. Fiat currency is otherwise known as fiduciary currency – the official legal tender used by countries. It includes the USD, EUR, or GBP in most cases. By placing buy or sell options on cryptocurrency, you are effectively forecasting which direction you expect the cryptocurrency to move. Leverage of 1:5 is available at most trading platforms, allowing you to use just £1 of your money to access a position worth £5.
Leverage is a powerful resource that can significantly enhance your profits, without your having to lay out all the money up front. Of course, a caveat is in order – markets can move in the opposite direction too. Fortunately, when you trade cryptocurrency, there are various safeguards in place such as stop loss and take profit. These options allow you to cut your losses if markets hit a downward spiral or take profits at fixed price points that you’re happy with. By no means is the cryptocurrency boom over – in fact it’s only getting started!